Chairman Krishnamoorthi, Rep. Porter Seek Information from Rental Car Companies on Falling Costs, Rising Prices
Washington, D.C. (March 18, 2022)—Today, Rep. Raja Krishnamoorthi, Chairman of the Subcommittee on Economic and Consumer Policy, and Rep. Katie Porter sent letters to Hertz Global Holdings, Inc. and Avis Budget Group, Inc., requesting information about rental car prices, which have risen by 24% over the past year. Hertz and Avis—two of the three major rental car companies that control over 90% of the U.S. rental car market—appear to have significantly increased prices despite falling costs, leading to record profits and sizeable payments to shareholders.
“Avis’s financials indicate that the company may have prioritized maximum profits and shareholder payouts at consumers’ expense,” the Members wrote in their letter to Avis. “We are deeply concerned that Avis may have engaged in predatory business practices during the pandemic, taking advantage of consumers who rely on affordable rental car prices.”
Both companies appear to have used their market position to raise prices substantially even as total expenses fell. Hertz and Avis undertook cost-cutting measures, including downsizing their fleets, decreasing their expenses by nearly $3 billion and $1.2 billion, respectively. However, both companies’ prices went up. Avis customers were charged approximately 26% more in 2021 compared to 2017 through 2019—resulting in a record net income of nearly $1.3 billion for the company. Hertz customers saw prices go up by approximately 39% in 2021, while the company achieved a net income of $366 million—2,395% greater than its average net income from 2017 through 2019. This strong financial performance came after Hertz filed for bankruptcy in May 2020 and was able to shed $5 billion in debt. Since then, the company has announced $2 billion in planned stock buybacks, and placed a $4.2 billion order to add 100,000 Tesla vehicles to its fleet.
The Members requested documents and information from both companies explaining the increases in rental car prices despite falling costs, as well as a list of any known investigations into these price increases. The Members also asked Hertz and Avis to explain what steps, if any, they plan to take to make rental cars more affordable in the coming year.
Click here to read the letter to Hertz.
Click here to read the letter to Avis.